ResMed pins hopes on new masks as revenue climbs 5pc

ResMed
chief executive Mick Farrell says the medical device maker has lost ground to competitors that have released new forms of masks to treat sleep disorders, but is confident the release of three new products will improve performance.

ResMed’s devices that treat obstructive sleep apnea are broken up into flow generators and masks. Sales of flow generators in the Americas, ResMed’s largest market, rose 5 per cent in the three months ended September 30, while sales of masks rose 3 per cent in the region.

“In Q1 [the first quarter] we did not grow us fast as we would like to in nasal and pillow [mask] category," Mr Farrell told analysts on a conference call.

But Mr Farrell, who took over from his father and ResMed executive chairman Peter Farrell in March, said ResMed would benefit from launches of “three great masks" in the US over the next six to nine months. “We have only just released our new mask products, but we were encouraged by their early sales," he said.

Mr Farrell said the Swift FX Nano had been selling well in Europe and was released into the United States in September. “We expect the Nano to get us back on the front foot in the nasal category," he said.

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ResMed’s overall revenue increased 5 per cent to $US357.7 million ($A371.7 million) in the three months ended September 30, which was a 4 per cent increase in constant currency terms. Net income for the period rose 14 per cent to $US80.9 million.

Mr Farrell said that sales in the US during the quarter had been affected by the second round of competitive bidding that began in July, but this was a “temporary distraction". The program requires ­suppliers such as ResMed to submit bids to provide certain equipment and supplies at a lower price than the US government’s Medicare has previously paid.

“We did reasonably well in holding our share in a tough quarter," he said.

Mr Farrell said the company had seen price reductions of between 5 and 7 per cent because of the competitive bidding process. He said the distractions from the program would cease in “a matter of months". “It’s not new to them [our customers]," he said. “They know what the challenges are and they’re working hard on getting all the paperwork sorted out. We are partnering with them."

ResMed chief financial officer Brett Sandercock said ResMed had bought back 432,000 shares worth $US21.1 million during the quarter. Of the 4.1 million shares remaining to be purchased under the current buyback program ResMed would purchase at least 2 million during the 2014 financial year he said.